Naslov
Debt management in small and medium-sized enterprises using financial ratios

Autori
Žager, Lajoš ; Sever Mališ, Sanja ; Ježovita, Ana

Vrsta, podvrsta i kategorija rada
Radovi u zbornicima skupova, cjeloviti rad (in extenso), znanstveni

Izvornik
Proceedings of the 7th International Conference for Entrepreneurship, Innovation and Regional Development, ICEIRD 2014 / Papadopoulos, George A. ; Ketikidis, Panos H. ; Kofteros, Stavriana A. - Nikozija : ICEIRD, 2014, 150-159

ISBN
978-9963-7355-4-9

Skup
The 7th International Conference for Entrepreneurship, Innovation and Regional Development, ICEIRD 2014

Mjesto i datum
Nikozija, Cipar, 05.06.2014. - 06.06.2014

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Međunarodna recenzija

Ključne riječi
business efficiency; external sources of financing; financial leverage; return on total assets; return on equity

Sažetak
Business decision making in small and medium- sized enterprises (SME’s) is a process focused on improvement of business efficiency. Considering that small and medium-sized enterprises are less complex systems, modeling and implementation of decision making techniques is easier than in large corporations. Debt financing in performing business activities demands particular consideration of SME’s stakeholders to ensure continuity of operations and to avoid accompanying risks. Statement of financial position reports the structure of borrowed and owned capital. Debt to asset ratio and equity to assets ratio do not give sufficient information on the indebtedness quality of a company. Due to insufficiency of information based only on capital structure it is suggested to use additional ratios for SME’s solvency evaluation. In context of business solvency evaluation analyst can use profitability ratios. The effect of financial leverage is crucial for determining ability to evaluate indebtedness of a company by using return on total assets and return on equity. The aim of this paper is to determine the existence of a relationship between capital structure and capital costs relating to profitability ratios for the companies that use external sources of financing on the sample of Croatian SME’s. The conducted analysis confirms the existence of relationship between return on assets and return on equity in terms of efficient debt financing of business activities. The results of this analysis can be useful for company’s management but also for other stakeholders as a valuable tool for improving the efficiency and business development of SME’s.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA